CHAPTER 7 Lease Versus Own
Renting or buying commercial office space each has its pros and cons. Depending on where your company is at and its future plans, each could be a good option. However, owning greatly reduces flexibility compared with leasing. You need to weigh these pros and cons along with your desired location. If your dream office space is for sale in the best area, making that investment may be reasonable. But most of the time, the company’s growth and ever-changing needs make it tough to permanently invest in commercial space. Here are the pros and cons of leasing and owning commercial real estate.
PROS OF BUYING
Tax Benefits Compared with Leasing
Property owners can make deductions on taxes. Interest expenses, non-mortgage-related expenses, and depreciation expenses can be deducted during tax time. Most of the mortgage-related expenses can’t be deducted, but what can saves companies a good amount of money when tax time comes.
Fixed Costs
You control your property and aren’t at the expense of a landlord anymore. Rent escalations over time are a thing of your past. Some increases can be as much as 3% per year. That can get up to 12% by year four. 39
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